The Alert Level System is still in place and businesses should continue to follow all current Alert Level rules. The Government has also announced an economic support package for businesses. Find the announcement on the Beehive website external link. If you're providing special perks to your employees, like gym memberships or work vehicles for personal use, you're likely to be liable for fringe benefit tax FBT.
Test your knowledge on employee allowances and fringe benefit tax. Jim has a plumbing business with three employees and two vans. Jim uses one of the vehicles himself, and his second-in-command, Paul, takes the other home each evening and weekend. When Paul first started, Jim let him use the van for non-work purposes at the weekend. Jim decides this is costing his business too much.
These are taxed via ESCT. You pay FBT on the cost of the benefit to the employee, eg the cost of the car for the portion of time it's available for personal use. When you first start giving your employees the benefit, you need to register for FBT with Inland Revenue.
You can register online or by calling Inland Revenue. FBT categories external link — Inland Revenue. If you're still not sure how FBT works, it's worth getting professional advice. Some Christmas parties for example can attract FBT. Find out if your party or function will attract FBT.
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Toggle navigation. Register for fringe benefits tax FBT. Register for fringe benefits tax FBT Last Updated: 20 January Fringe benefits are an important part of business and can be a useful way to attract quality staff.
If you're going to provide fringe benefits to your staff, make sure you understand your taxation obligations. FBT is a tax that employers pay on benefits paid to an employee or their associate, such as a family member in addition to their salary or wages. FBT is calculated on the taxable value of the benefits you provide. Enrolling in a group dental insurance plan through work can have a big impact on an employee's bottom line.
These plans normally cover a certain dollar amount of work, which is divided up into three different categories, including preventative, basic, and major dental work. Both health and dental benefits are deducted on a pretax basis. This means they're deducted from an employee's gross income , so it reduces the amount of tax that's taken off your paycheck. Life insurance can be costly.
If you want to get an insurance policy when you get older, you'll end up paying more in premiums. Taking the option of a group term life policy through work eliminates that cost.
That's because the risk to the insurance company is spread across many different people. Most employers actually offer this type of insurance for free. Although term life only covers you up to a certain age, you may be able to extend coverage terms and get more for your beneficiaries for a few extra dollars a month. Just like health and dental insurance, this is pretax.
Some companies offer matches on employee k paycheck deferrals, while others make qualified contributions to retirement plans without requiring employees to make contributions themselves.
These plans can be powerful tools in saving for the long-term and provide compensation to employees above and beyond their salaries. These plans are commonly known as pension plans. These plans pay employees a specific benefit amount after they retire based on their years of service and annual salary.
Plans are administered by investment managers hired by the employer. Unlike individual plans, it's the employer who takes on the risk with a group-defined benefit or pension plan. Employees can contribute a specific amount of their salary on a pretax basis to this type of plan.
Since it is optional, employees are responsible to administer and monitor the plan, which means they must evaluate the risks associated with their investment decisions. Some employers may also match employee contributions to the plan. As with the other plan, deductions are pretax. But the payout is based on how much was contributed over the term of employment, in addition to any gains or losses.
Employees must allow certain contributions to be vested before they can make any withdrawals from employer-sponsored retirement plans.
Vesting gives employees full access to specific assets after a certain period of time. This vesting period normally applies to employer contributions. Companies do this to keep their workers from leaving to pursue opportunities elsewhere. For instance, a company may require contributions to a defined contribution plan to vest for five years before an employee can access them. If you decide to leave before that period, you forfeit the right to any unvested contributions.
You may be able to negotiate certain fringe benefits with your employer even if they're not offered. It's always a good idea to ask, especially if it helps the company. Childcare assistance is another benefit offered through some employers, as working full-time with children can present scheduling conflicts and prohibitive daycare costs.
Some larger employers offer employees dependent care on-site, either at a discount or for no cost. Smaller companies may provide a monthly bonus to employees for the specific purpose of paying for dependent care. Other companies can offer dependent benefits to employees by allowing them to contribute to a plan on a pretax basis.
Along with nonfinancial perks and your salary, you may be entitled to bonus compensation. This is a financial award that is above and beyond anything else that your employer provides. Most companies pay bonuses at the end of the year and some may even provide new hires with a signing bonus when they're first recruited. Bonuses are commonly paid if you meet certain targets. For instance, if you work in a sales department and your team meets your monthly quota , your company may pay each member a bonus.
If you meet your individual target, you may be paid an even bigger bonus at the end of the term. Keep in mind, though, that bonuses are considered taxable income , so income taxes are deducted and you have to report the amount on your annual tax return.
Another common fringe benefit is education assistance or tuition reimbursement for college courses or the completion of an advanced degree program. Employers offering education assistance may allow employees to work flexible schedules so they can balance their education and work obligations. Employees may also be provided tuition reimbursement for all or part of the expenses.
For larger employers with ample space, access to an on-site fitness center is a common fringe benefit to employees. Smaller employers may also offer gym memberships at a discount or a fitness equipment reimbursement up to a certain limit each year.
Meals or discounted cafeteria plans may also be offered to employees as fringe benefits. Employers recognize that the cost of lunch or dinners when employees work late can add up quickly and, as such, meals are provided by some employers at no cost to the employee.
Having downtime away from work is crucial for every employee. That's why employers almost always include paid time off in employee contracts. This allows workers to get some much-needed time away from work, whether that's to take a vacation or to just rest at home, and still receive pay.
The more time you spend working for your employer, the more off you'll likely receive with pay. Your employer may also provide you with paid time off for other circumstances such as family emergencies, funerals, childcare, maternity, and paternity leave. Some fringe benefits come in the form of reduced prices on goods and services. Often, workers can get employee discounts on products that their company or one of its subsidiaries makes.
Some employers provide staffers with cell phones, and cell phone providers offer corporate discounts on their plans to certain large companies. Museums and cultural institutions might offer free admission to employees whose firms are major donors or event sponsors, too. In terms of lifestyle, some firms reimburse employees for commuting or moving expenses.
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